Flex LNG is set to become the latest company backed by shipping billionaire John Fredriksen to list in New York.
Flex, which already trades in Oslo, has filed a draft registration with US regulators to float in the world’s largest capital market.
The company will join siblings Frontline, Golden Ocean, Ship Finance International and Seadrill to have shares traded stateside if the plan is a success.
However, the listing will not end New York’s long wait for a shipping IPO as Flex will not be issuing new equity in connection with the trip across the Atlantic.
“There has not been a shipping IPO in the US since the summer of 2015. Now we do it Spotify/Slack style on the basis the $300m we raised last October,” Flex LNG chief executive Oystein M. Kalleklev told TradeWinds.
The company announced the move as the industry gathers in the US for the annual CMA event.
Kalleklev has experience of the US capital markets system from his time at KNOT Offshore Partners, Trygve Seglem’s MLP.
“A direct listing doesn’t require issuance of new shares, is considerably cheaper and has a higher level of deal certainty as we are not dependent on raising more equity,” he said in an email today.
“Being listed in the US, Flex LNG will gain access to an attractive equity market when it comes to depth, scale and liquidity, which will make the company with its unique position and business strategy, an attractive investment for those seeking exposure to a transformative LNG landscape.”
Kalleklev said liquidity in the US stock would be affected by the lack of new shares directed towards US investors and Flex was working on some solutions to this.
However, a year on from the New York float it will be able to file a shelf registration, which provides the ability to raise equity in the US overnight.
Flex and its backers are looking to play an upturn in the LNG market.
It has four ships on the water and will take delivery of two more this year, five in 2020 and the final two newbuildings in 2021. Of that stable of 13 ships, 11 are open to the market.
“Everybody can buy a vessel and fix it on a seven to 10-year charter, but not everybody can take this kind of view on a market or asset class,” Kalleklev told TradeWinds last month.
“We have the guy with the best track record in this industry, and he has belief in it. We share his view and are executing the strategy accordingly.”
He added: “As long as we have this strong balance sheet and sponsor we can afford to take some risk.”
Writing in the company’s annual report today, the executive expressed his confidence in the market.
“Flex LNG expects a further tightening of the LNG shipping market in the coming years, especially in 2019 and 2020, due to high growth in LNG production and higher demand for natural gas as utilities are switching from coal to cleaner natural gas,” he said.
“This is combined with increased sailing distances due to the increased supply from the U.S. and Russia in particular. Flex LNG is well positioned with four modern fuel efficient LNG carriers on the water, and another nine newbuildings set for delivery with very favourable slots in 2019-2021.”
